Was it last week that I saw an announcement of a bailout package for Spain amounting to €100 billion? Today, the Telegraph front page had a new number. The latest bailout for Spain, and now Italy, will come in at £600 billion. The bailout numbers are getting bigger.
The Eurozone is now setting up two bailout funds. Obviously, one is not enough, and more is always better. The first fund will be called the European Stability Mechanism. It will have €500 billion. The second will be The European Financial Stability Facility, and it will have €250 billion. In future, both funds will buy bonds from bankrupt Eurozone members.
Where is all this money going to come from? That is a tricky one. I want to say Germany, but I somehow doubt that even the Germans can come up with that kind of cash. My feeling is that the money isn't really there. The Europeans think that if they issue a press release claiming to have a big pot of cash, they will convince financial markets to keep on buying Spanish and Italian debt.
Actually, that has been the plan all along. If you pretend to be rich, people and especially bond investors, might think you are rich.
Will it work? I think we all know the answer to that one.....